3 million givers:
necessary drive for reachable goal

Needed first: a cultural shift in fundraising

In May, DEI (formerly the Development Exchange Inc.) enunciated a systemwide goal for public radio: raising the total number of donors to 3 million in a little more than four years. The goal virtually forms a template for the individual-giving strand of DEI’s Public Radio Development & Marketing Conference this week in Orlando, Fla. Two veteran fundraisers leading the 3MG initiative lay out the challenge.

Originally published in Current, July 14, 2008
Commentary by Jay Clayton and Melanie Coulson

Public radio stations’ ability to provide important services to their communities depends on—more than any other factor—increasing the number of givers who support them. Three recent trends indicate this will become even more crucial as programming costs grow.

  Stations benefit by investing effort to build their donor base long-term rather than by setting short-term revenue goals for what they can raise immediately. That gives them resources to withstand economic fluctuations. It gives them leeway to focus on their vital programming missions, expand service through digital platforms and, ultimately, have stronger and lasting ties to their communities.

The 3MG (3 Million Givers) Initiative is public radio’s first-ever collaboration to grow the stations’ number of annual givers. Reaching the goal of 3 million donors a year by the end of 2012 would represent a 20 percent gain above the 2.5 million who have made contributions to public radio each year, on average, since 2003.

You may wonder whether public radio, a mature nonprofit sector with no significant audience growth, can add 500,000 donors in five years.

The answer is a resounding yes.

Meeting the 3MG goal with
the listeners we already have

Why do we think it’s doable? We consulted DEI’s Benchmarks for Public Radio Fundraising. Stations use Benchmarks to measure their fundraising performance in net revenue relative to audience and to assess their potential based on how other stations are doing.

The potential is there. Public radio stations already have enough listeners to have 3 million givers or more.

In the 2007 Benchmarks, DEI has studied the performance of the stations that are most effective at converting listeners into givers. We looked at the top performers—the 90th percentile, the top 10 percent of participating stations. To meet the 3MG goal, stations would have to add 4 percent more donors a year, on average, for the next five years.

Here's how to calculate where your station stands.

We believe this is possible based on the fundraising efficiency of those top-performing stations. They are twice as efficient at turning listening into givers, whether the donors are members giving up to $249 a year or mid-level donors giving $250 to $999. If you factor out audience size, a 90th percentile station has nearly twice as many givers as the median station.

It’s not realistic to think that every station will match the efficiency of top performers. Growing the donor base will require significant shifts in listener fundraising. Significant change involves risk, and managers’ responses will differ.

3MG takes all of this into account. Big changes take time, so DEI planned a 5-year initiative. Public radio can reach 3MG even if many stations don’t reach top conversion rates.

Let’s start by considering the 76 Benchmarks stations that rank below the 80th percentile in fundraising efficiency. These stations alone will gain 212,000 of the target 500,000 new givers if they can do the following:   

These 212,000 additional givers alone would add $23.3 million in gross revenue for the Benchmarks stations to invest in programming, expansion of digital services and other vital community initiatives.

The 97 licensees in the Benchmarks include many of the largest stations (combined, the Benchmarks stations account for about half of all listening to public radio). This leaves approximately 260 licensees to attract the additional 288,000 new donors — for each, an average of 275 new givers a year through 2012. That’s a tall order for public radio’s smallest licensees, but the mix also includes some of the bigger ones.  

Some stations can and will exceed their targets. Benchmarks stations at and above the 80th percentile have headroom for growth. So, as a group we are likely to do even better than 500,000 new givers.

Stations will be positioned for long-term financial health — sustainable gains in dollars and donors — if they adopt fundraising principles and practices pioneered by public radio’s most effective fundraisers and if public radio goes beyond what even its top performers are doing to keep their donors and attract new ones.

Every station, regardless of its size, format, market, licensee or current revenue, has the potential to benefit from the 3MG gains.

DEI looked at whether the 80th percentile in fundraising efficiency tended to exclude stations based on their market size, format, revenue or licensee type. We found that none of these factors limits a station’s potential, with two exceptions: Classical and jazz stations have fewer givers relative to listening compared to other station types. That said, every station has room for growth. In many cases, the room is significant.

Not sustainable: Relying on more support from present donors

In May, DEI introduced to member stations a series of recommended 3MG Core Principles. To some, they were no surprise, because fundraising leaders have advocated them as best practices. The principles are consistent with the recommendations of Tom Ahern and Simone Joyaux (Keep Your Donors) and Penelope Burke (Donor-Centered Fundraising) and are informedby the thinking of David Giovannoni and Leslie Peters in the public radio white paper Principled Pragmatism.

To maintain and improve public radio’s fiscal health, every station has to focus its efforts on givers more than revenue. Dollar gains matter, of course, but focusing primarily on cash receipts — rather than working to win donors’ long-term support — keeps many stations from reaching their potential in givers and income.

Between 2003 and 2006, public radio’s entire net gain in individual-gift revenue came by extracting larger gifts from donors it already had.

That kind of fundraising isn’t sustainable. Just examine the experience of our counterparts in public television. During the mid-1990s, public TV generated year-to-year revenue increases even as its number of donors declined. Since then, except for a slight increase in 2000, viewer support of public TV has been flat, and its number of donors has continued to shrink. We must break out of our present fundraising paradigm.

Long-term financial health depends on increasing the number of individual givers to stations. Stations tend to focus on increasing the average gift to meet goals for pledging and other campaigns. They often put too much emphasis on mid-level gifts of $240 or $500 — and on the motivation from thank-you gifts.

It’s important to have a lot of mid-level givers, but those dollar amounts are higher than many first-time givers can afford or will contribute. Focusing too heavily on higher amounts plays into the view that smaller gifts don’t matter. Many listeners with this perception simply don’t give. Thus stations lose hundreds — if not thousands — of chances to convert listeners into givers. Many years’ forgone donations become significant revenue losses.

What distinguishes the most effective fundraisers is not the average size of gifts but the breadth of the base of listeners with whom they have made common cause.

Top performers in the Benchmarks survey have almost the same average gift ($85 vs. $83 for the median station) as other stations in the under-$250 “membership” gift category. In the mid-level range, $250-$999, their average gift ($381 vs. $379) is also similar to that of the median station. Benchmarks stations in the 90th percentile achieve top performance not by extracting bigger average gifts but by encouraging larger numbers of givers relative to audience.

But few if any public radio stations have fully shifted their operating cultures to cultivating relationships with individual givers and earning their long-term support. It’s easy to understand why. The fundraiser must trust that revenue will keep pace as they build the donor base. That is a considerable risk for a station manager, especially knowing that bills are paid with money in the bank, not donors’ names in a database.

Public radio’s focus on revenue and the average gift is like Wall Street’s fascination with quarterly profits. These numbers tell us only where we are now. To see where we could go, we need to look beyond short-term metrics.

The 3MG core principles are the foundation of many sessions in the individual giving track at the PRDMC in Orlando this week. To learn more about the 3MG Initiative and the core principles overall, attend Enlarging Your Donor Community: 3MG, Friday, July 18, 11:30 a.m.-12:30 p.m. Below we note other pertinent sessions with each of the principles outlined.

Growing givers: The core principles

It’s all about the givers ... and the relationships we cultivate with them over time. Set short- and long-term goals to increase the number of givers to your station. Track this number. Build it at least as avidly as you push for listener revenue. Every station employee has a role in attracting givers and keeping them. Plan to attend: A Holistic Approach to Individual Giving, Thursday, 11:30 a.m.–12:30 p.m., and Enlarging Your Donor Community: 3MG (see above).

Treat givers as friends and listeners as potential givers. Develop relationships, not transactions. Understand why donors keep giving and why they stop. Make every effort to retain your donors and bring them back. Retaining donors costs you less than bringing in new ones. They are your best prospects. Plan to attend: Adrian Sargeant Seminar, Part I: Donor Motivation, Friday, 9:45–11 a.m. The State of the System in Individual Giving, Friday, 4:15–5:30 p.m.; the Saturday Leadership Address with Penelope Burk, 8:30–9:30 a.m.; and 3MG: Renewal and Additional Gift Packages, Saturday, 11:30 a.m.–12:45 p.m.

Simplify the giving process. Eliminate barriers such as poor customer service, complicated online contribution forms and offers available only online or by mail. Create flexible installment-giving plans and sustaining giving programs so a donor can give monthly in perpetuity. Go online to reach potential givers who tend to communicate electronically. Plan to attend: Sustaining Your Sustainers, Friday, 2:15–3:30 p.m.; and Enlarging Your Donor Community: 3MG (above).

Give ongoing attention to all categories of contributors, regardless of the amount. Pursue high volumes of small, medium and bigger gifts in the membership ($1-$249) and mid-level ($250-$999) ranges. Building these categories of giving, without sacrificing one for another, will help you achieve long-term financial health. Plan to attend: A Holistic Approach to Individual Giving (see above) and Enlarging Your Donor Community: 3MG (see above).

Pursue first-time gifts strategically. These gifts are 20 percent smaller on average than gifts from current donors, but babies are known to grow over time. To attract more new givers, find your first-time contributors’ most frequent gift amount (usually lower than the first-time average) and invite more people to give at that level. Plan to attend: Enlarging Your Donor Community: 3MG (see above).

Get the second gift. It’s as critical as the first one.

Nonprofits typically spend 100 percent or more of a donor’s first gift on the costs of winning over him or her, yet we lose more donors after the first gift — and before the second — than at any other time in our donor relationships. Getting the second gift is key to assembling the full potential number of givers and keeping fundraising costs low. Plan to attend: Adrian Sargeant Seminar, Part II: Donor Retention, Friday, 11:30 a.m.–12:30 p.m.; the Saturday Leadership Address with Penelope Burk (see above); and 3MG: Renewal and Additional Gift Packages (see above).

Use proven practices to help you keep donors. Communicate with them between their first gift and the second ask. Give them timely and personal recognition of their first gift. Show them their contribution was used as intended and made a difference in the station’s mission. Plan to attend: 3MG: Penelope Burk on Donor Communication, Saturday, 2:15–3:30 p.m.; and the Adrian Sargeant Seminar, Part II: Donor Retention (see above).

Make sure your files include donors’ ages. It’s a key factor in philanthropy. Direct-response expert Roger Craver’s 2008 DonorTrends Survey finds that post-boomers (born after 1964) donate an average of $1,205 a year while boomers (born between 1946 and 1963) average $1,098 a year. Post-boomer giving increased 52 percent in the past three years!

Why is this important to public radio? Target Analysis Group’s 2007 Public Radio Internet Giving donorCentrics Analysis shows that, for 12 major public radio stations, the largest concentration of lapsed donors, both online and off-line, is between 35 and 44 years old—significantly younger than for other national nonprofits. We need to be much more aggressive in our efforts to acquire, retain and reactivate post-boomers. Plan to attend: Online Giving: The Latest Research, Saturday, 11:30 a.m.–12:45 p.m.

Use your air to educate listeners about the value of the station and the importance of listener support, not just to ask for their money. Look for strategic opportunities to use your air outside of on-air drives. Keep your fundraising program open for business 24/7. Plan to attend: The Morning Edition Aircheck Project: A Pledge Refresher for Everyone, Parts I & II, Friday 2:15–3:30 p.m. and 4:15–5:30 p.m.

Value your listeners’ e-mail addresses as much as their postal addresses and phone numbers. Target Analysis Group’s 2007 Public Radio Internet Giving donorCentrics Analysis indicates there are multiple benefits to having your donor e-mail addresses on file, including higher multiyear donor renewal rates. Plan to attend: The eNewsletter 360 Track, Thursday, and Online Giving: The Latest Research (see above).

Collaborate with other stations wherever possible to gain scale and reduce fundraising costs. With NPR funding, DEI tested the efficiency of centralized direct-mail fundraising in a pilot collaboration among licensees including Colorado Public Radio, Minnesota Public Radio, WAMU, WBUR and WNYC. Response to their shared donor-acquisition test package outperformed control packages for two stations and had high response rates for three others. Costs were reduced by having one expert do work that ordinarily would take five. DEI and NPR will expand the project to 20 stations in 2009. (The creative packages are available free to any station from DEI or NPR.) Plan to attend: Breaking New Ground with the 3MG Direct Mail Acquisition Test Project, Saturday, 9:45–11:00.

Which path will you choose?

Benchmarks data indicates that public radio is at a fundraising crossroads. The potential for growth is clear and significant. But the figures don’t tell whether we’re willing or able to make the required changes in our practices. The data don’t reflect the risk involved in significantly changing a fundraising culture that has had considerable success for nearly four decades.

What makes us think public radio can change its fortunes when the nonprofit world is filled with stories about how it has become harder to attract and keep donors?

With little or no growth in audience or givers in recent years, it’s tempting to conclude that public radio has reached its peak and our best period for growth is behind us. But results achieved by top-performing stations demonstrate overwhelmingly that public radio on the whole still has plenty of room to grow.

The public radio community gets to decide our own future, at least in fundraising.

We can stay on our present path and expect to yield much the same results as the past five years. Or we can embrace changed practices mapped out in 3MG and create a much healthier future. The Benchmarks speak for themselves. The potential is clear. We must ask ourselves: What future do we want for public radio?

We must consider the millions of listeners who count on public radio every day. They count on us to make smart decisions on their behalf, about fundraising as well as programming — most of all, about the choices we make to ensure that public radio becomes an even more trusted, independent and vital resource than it is today.

How to calculate your station’s fundraising effectiveness

Jay Clayton is DEI’s coordinator for individual giving and the 3MG Initiative and manager of its Benchmarks for Public Radio Fundraising. When he was WBUR’s marketing director he co-created its More Programming, Less Fundraising techniques.

Melanie Coulson is DEI’s coordinator for online individual giving and 3MG. She has been active in national studies and raised funds for 13 years at stations in Vermont and Seattle/Tacoma.

Both also work independently as development consultants.

The headline of this online article is slightly revised from the print edition's.

Web page posted July 14, 2008
Copyright 2008 by Current LLC

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RELATED MATERIAL

Dana Davis Rehm of NPR applauds 3MG initiative's focus on listener revenue.

How to calculate where your station ranks in fundraising effectiveness.

LINKS

DEI 3 Million Givers Initiative

DEI Benchmarks for Public Radio Fundraising.

DEI's Public Radio Development & Marketing Conference, July 2008

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